Summer Sales Sluggish As Consumers Remain Cautious

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How’s business?

Karen Austin, president, home electronics, Sears Holdings:

Business is about what we planned. There have not been too many surprises so far.

Jeannette Howe, executive director, Specialty Electronics Nationwide:

Business is up for most of our members. That said, 2009 was a pretty horrible year for many independents, so being up is the only option if you want to stay in the business. The dealers that have survived are battle scarred and certainly leaner, but they are savvier business people too. The most successful dealers have downsized and yet have been proactive with their customer base.

The biggest challenge for many of the specialty dealers is recognizing that new construction is not going to bounce back quickly and we are now in a retrofit world. For many dealers in the custom- installation space, this transition has been like starting an entirely new company. Just running wires, like selling TVs, is no longer a viable way to keep a company afloat. We are encouraging dealers to get into all aspects of home automation and control.

One member in an affluent market observed that customers used to come in to see how much they could spend, and now they come in to see how much they can save. This more frugal mentality is with us to stay and the independent channel must respond accordingly.

David Pidgeon, president/CEO, Starpower:

Business continues to be challenging. While we have seen some improvements, particularly in our largest and smaller orders, they have been off set by some disappointing results in our midsize orders.

Jim Ristow, executive VP, Home Entertainment Source:

It is a challenge, but the group is faring better than the overall market. Several of our suppliers have reported that HES and [parent buying group] BrandSource are continuing to outpace the industry. This speaks to the resiliency of the HES/ BrandSource members and our programs that allow them to stay quite nimble.

Ross Rubin, industry analysis director, The NPD Group:

We’re seeing evidence of overall health. Year-over-year comparisons in categories such as LCD TV — particularly for smaller screens — must be looked at in light of the analog TV cutoff run last summer. Aggressive plasma pricing is leading to some of the strongest growth there we’ve seen in a long time.

Similarly, after such strong growth in notebooks, particularly netbooks last year, growth this year is more modest.

Dan Schwab, co-president, D&H Distributing:

Business is strong, with various categories still showing growth. D&H experienced overall growth of 20 percent last fiscal year [ended April 30, 2010]. This included a 12 percent rise in sales in the display category.

Other growth areas include notebooks and LED/LCDs within the display category, and we’ve also seen good performance in areas like personal care and housewares. Some categories, such as gaming, were up at D&H even though they were down in the industry in general, so we’re proud of being able to pass that success along to our dealers.

This year continues to be solid for us, with sales still up around 20 percent due to our investments in our customers. That includes program enhancements such as increasing the amount of manufacturers and prizes involved in our Incentive Rewards plan, additional sales support, and so forth.

Fred Towns, sales and marketing senior VP, New Age Electronics:

New Age Electronics is eight months into fiscal year 2010 and we are optimistic about what the back-to-school lineup and holiday selling season will hold for our retailers. We are excited about the latest consumer electronics and gaming products this season has to offer, such as the next-generation television from Sharp that offers improved refresh rates, impressive color palette and overall great HD picture quality.

Michael Vitelli, executive VP, president- Americas, Best Buy:

This summer, our customers are looking to find the technology that helps them connect with the services, information, entertainment and people that matter most to them. We recently launched a store reset that included a focus on IPTV connectivity solutions, mobile broadband and home broadband. This is a great opportunity for us to drive incremental margin by attaching connections to the millions of connectable devices we sell.

Dave Workman, executive director/ COO, PRO Group:

Business has been choppy since the first of the year. We are seeing gains in the audio and mobile categories but continue to struggle with dollar gains in the TV category based on the embedded ASP reductions created from last year.

The comparisons in the category should get easier in the second half, but it remains to be seen if the consumer will respond in greater numbers to price points above $1,000. One thing which is hampering this is the consumer’s reluctance to take on new debt. The TV sale has been historically one of the most frequently financed sales — with this reluctance it is holding back some of the sales potential with these price points, even though underwriting changes are giving retailers a higher approval percentage compared with last year.


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